When it comes to trading, our style, risk, and personal analysis are as unique as we are individual. Some people trade casually while others do their best to carve out a living from it. In our pro series, we have been sharing the best of the basics to help you gain confidence in market analysis, reading historical data for causalities, journaling practices, and how to remain in the market for greater earning potential.
Most people are juggling work, school, daily chores… Life stuff. The average Joe might not have supplemental funds or the time it takes to be a full time active trader but we want to stress that patience is a virtue and you do not have to be chained to your monitor to make a profit. So, let’s take a moment to figure out what kind of trader you really are.
Below is a list of 4 types of traders:
- Scalper
- Day Trader
- Swing Trader
- Position Trader
[rml_read_more]
Scalper
If you’ve played chess using the clock for time control and an extra level of sophistication in play, then scalping is similar to trading within the lightening blitz of time control. You might also think about ticket scalpers who dive in, make a quick profit and disappear.
Scalpers require a strict trading plan, quick decision making, and intense focus. It involves trading with a low trade holding time within a small time frame (TF). Let’s say you mark it for anywhere between one to five minutes TF.
The scalpers’ objective is to accumulate small PIPs (Percentage Increase in Price) during highly volatile periods. In order to do this, scalping requires long trading hours with your undivided attention at the trading desk.
While we do not recommend this type of trading for beginners as we see it as the domain of algorithmic traders, but scalping might actually be your trading style if you can answer yes to a combination of the following.
- Do you enjoy the adrenaline rush that comes with active trading?
- Do you enjoy focusing on your charting software for long hours?
- Are you naturally impatient and cannot wait on a trade setup for long hours?
- Can you think fast and switch your bias on a position quickly and frequently?
On the flip side, if you answer yes to the following, scalping may not be a good idea.
- You cannot handle stressful and active environments.
- You cannot stay glued to your charting software for long hours.
- You prefer looking at the bigger picture or long game within the cryptocurrency market.
Here are a few Key Points to consider if you want to scalp successfully
- Trade only patterns that offer high win rates.
- Factor in the spread when projecting your profit target.
- Adopt a strict money and risk management plan.
Day Trader
Day trading involves spending time analyzing your preferred cryptocurrency charts and waiting for intraday price signals, or a combination of signals.
Day traders will not typically hold trades overnight because there is a higher risk by exiting their trades either through profit or loss by the end of their trading day.
If you can answer “Yes” to the following questions, then day trading might be for you.
- Do you prefer to start and end a trade within the same day?
- Are you capable of analyzing and monitoring the crypto market from beginning to end of day?
- Would you prefer to know if you win or lose at the end of a trading day?
Questions to answer to determine if day trading is not for you.
- Do you have a day job?
- Would you prefer to trade within longer or shorter time frames?
- Do you have limited time at your disposal for key analysis?
If you decide that day trading is for you, then consider one of the following day trading methods such as Trend following, Counter Trend Trading, or Trading Breakouts.
Swing Trader
As a swing trader, your trade holding time will be longer than that of a scalper or day trader. In fact, you may have to keep trades for several days in a row.
This trading style is suitable for those who do not have a lot of spare time to sit at their desk monitoring trades throughout the entire day, but make time to analyze the daily market fluctuations and trade somewhat at your leisure.
A swing trader looks for broad swings in the market that could potentially last for a couple of days. This is mainly formed as an exit of overbought or oversold, in combination with high probability reversal candle patterns on the 4-hour or daily time frames.
You may be a swing trader if you are patient and don’t mind having wide stop loss levels. This makes for fewer trades but your earning potential is still present, albeit a less frantic pace.
Positional Trader
The positional cryptocurrency trader is someone who can hold a trade for a couple of months. These are your hard core HODLers but we’ve also found that many who go this route do not have significant capital to begin with. We do not recommend this trading style on a margined account but if your intention is to buy and hold, it might be a good idea to store your cryptocurrency in an offline cold storage wallet as you analyze the long term long term technical and fundamental prospects of the market.
Your trading style does not have to be limited to any one practice. There is nothing wrong with using your time and resources to try day trading even as you keep a significant amount of your portfolio as a position player. Styles change with risk assessment and your comfort level. It’s just vital to remember that emotional bonds to a particular token never pays off. Look to your charts and find a good entry point. Even if your buy in turns out to be the high, there is nothing preventing you from turning that order into a long game until you gain a profit again.
Disclaimer
Content provided by CryptoTraderNews is for informational purposes only, and should not be construed as legal, tax, investment, financial, or other advice. All information is of a general nature. As always, there is risk with any investment. In exchange for using our products and services, you agree not to hold CryptoTraderNews Pro, its affiliates, or any third party service provider liable for any possible claim for damages arising from decisions you make based on information made available to you through our services.
